Perilous Reversal Stock: Key Energy Services (KEG)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Key Energy Services ( KEG) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Key Energy Services as such a stock due to the following factors:

  • KEG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.4 million.
  • KEG has traded 56,081 shares today.
  • KEG is down 3.9% today.
  • KEG was up 11.9% yesterday.

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More details on KEG:

Key Energy Services, Inc. operates as an onshore rig-based well servicing contractor in the United States and internationally. The company operates in U.S. and International segments. Currently there are 5 analysts that rate Key Energy Services a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Key Energy Services has been 2.8 million shares per day over the past 30 days. Key Energy Services has a market cap of $369.9 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.90 and a short float of 4.4% with 1.02 days to cover. Shares are down 68.1% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Key Energy Services as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • KEY ENERGY SERVICES INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, KEY ENERGY SERVICES INC swung to a loss, reporting -$0.14 versus $0.68 in the prior year. For the next year, the market is expecting a contraction of 153.6% in earnings (-$0.36 versus -$0.14).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has significantly decreased by 1183.6% when compared to the same quarter one year ago, falling from -$4.85 million to -$62.23 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, KEY ENERGY SERVICES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for KEY ENERGY SERVICES INC is currently extremely low, coming in at 11.69%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -17.01% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $18.82 million or 82.94% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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